Honestly I think Nintendo will go for much more powerful hardware next time around, maybe not on par with the PS3 or 360, but something as powerful as the current next gen systems or maybe just a bit weaker. Once current Wii users get used to the limitations of the system, I'm sure there will be an outcry for better looking games. So how would Nintendo address this, yet still maintain functionality of GC and Wii software and hardware? Since eventually what is being done on Wii will become more popular and commonplace on competitor's systems, Nintendo will have to continue to innovate heavily each round, or innovate on the same current idea as right now, and just improve the overall specs for the next generation.
So what would be my "ideal" yet practical next generation Nintendo system's specs?
CPU: Well for this I'm sure PPC architecture will be the way to go again, and to keep cost down, Nintendo will go for somewhat older hardware, maybe a processor on the same level as the Xenon, but perhaps with 4 cores on a 45 nm process or lower instead of 3 on 90/65 nm. Nintendo has no need to invest in floating point monsters on the likes of the Cell BE if all they really need is a "Wii 2.0". They just need to finally make current HD graphics a possibility for consumers until the control system's "innovation" wears out, and they have to innovate in other ways. I'm not too well versed with emulation and architecture, but if a newer PPC core is running instruction sets and similar processes that were present in older PPC architecture like the 750CL, I don't see why GC and Wii stuff should run perfectly fine on a newer, more powerful processor, just run on a single core, implement same instruction sets, lower the clock speed and go.
GPU: With graphics pick up a real necessity, I figure Nintendo will have to develope a whole new GPU and just keep the old Wii GPU for backwards compatibility. I imagine a Wii 2.0 to have a GPU on the likes of the ATi 3870 or even about 50% faster.
RAM: A smart decision was made with the Wii being given a nice large amount of RAM for the entire system and I would know doubt expect anything less for the Wii 2.0. A full GB pr GDDR4 is what I expect, split into seperate VRAM and SRAM pools running on hopefully 256 or 512-bit memory buses for the graphics.
Basically I'm aiming for specs that give Wii owners a taste of what current 360, PS3, and PC owners are getting right now.